DTN Before The Bell Grain Comments

Morning CME Globex Update:

March corn was down 1 cent, March soybeans were down 2 1/2 cents, and March Chicago wheat was down 2 3/4 cents. At 8 a.m. CST, USDA announced 8.7 million bushels (236,700 mt) of U.S. soybeans were sold to unknown destinations, 6.3 million bushels (170,700 mt) of which were for 2016-17. Before the announcement, all three grains were off to a modestly lower start Wednesday, safely within the confines of their sideways trading ranges.

Other Markets:

Dow Jones:	Higher
U.S. Dollar Index:	Higher
Gold:	Lower
Crude Oil:	Higher

Corn:

March corn was down a penny early, continuing to perform a balancing act within the middle of its sideways range. Here in the Midwest, DTN's forecast is mostly dry through the weekend with increased precipitation expected early next week in the eastern Midwest and Mississippi Delta. Down south, conditions remain mostly favorable for Brazil, but flooding concerns return with a chance for moderate to heavy rain in central Argentina. Thanks to 2016's record corn harvest, corn basis remains weaker than usual, but is showing slow improvement with help from increased demand for ethanol and active export activity. USDA's reported 3% increase in beef cows on Jan. 1 also bodes well for corn demand. March corn continues to trade within a sideways range with a slightly bullish tilt coming out of January. DTN's National Corn Index closed at $3.24 Tuesday, priced 35 cents below the March contract and down from its highest price in six months. In outside markets, the March U.S. dollar index is up 0.24 and March crude oil is up 47 cents a barrel with the Energy Department's inventory reports due out at 9:30 a.m. CST.

Soybeans:

At 8 a.m. CST, USDA surprised markets with a sale of 8.7 million bushels (236,700 mt) of U.S. soybeans to unknown destinations, 6.3 million bushels (170,700 mt) of which were for 2016-17. Remember this is the week when China is celebrating its New Year and was not expected to do business. Before the announcement, March soybeans were down 2 1/2 cents, continuing their lower slide of the past two weeks. Flooding concerns for central Argentina have not totally gone away and there are chances for a return of moderate to heavy showers this week. However, concerns about Argentina have lost much of their bullish impact on prices while Brazil's harvest makes its way to ports. On the demand side, expectations for higher pork production in 2017 favors increased soybean use while a big question mark hangs over USDA's export estimate. So far, U.S. soybean exports are up 20% from a year ago, but Brazil's soybeans are on the way and there are big concerns about the future of trade with China who is supposed to be out of town this week. So far, March soybeans are maintaining a sideways trading range with a slight bullish lean. DTN's National Soybean Index closed at $9.49 Tuesday, priced 76 cents below the March contract and down over 50 cents from its highest price in six months.

Wheat:

March Chicago wheat was down 2 3/4 cents early, giving back Tuesday's late-session surge, but not really going anywhere fast. As has been the case for a long time, U.S. wheat supplies are plentiful and there is not much that can happen over winter to change that. The lower start for the U.S. dollar index in 2017 is slightly helpful for U.S. wheat exports, but not enough to dent wheat's surplus. DTN's seven-day forecast remains mostly dry for the southwestern Plains with temperatures becoming warmer again by Sunday. This year's winter wheat crop may show some problems this spring, but so far, traders remain bearish on Chicago wheat and March prices continue to chop up and down within a sideways range below $4.37 1/2. DTN's National SRW index closed at $3.84 Tuesday, priced 37 cents below the March contract and down from its highest price in five months.

Todd Hultman can be reached at todd.hultman@dtn.com

FollowTodd on Twitter@ToddHultman1

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